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Apple purchasing flash memory from Japan to reduce reliance on Samsung

post #1 of 35
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Apple is increasing purchases of flash memory from Japanese suppliers in an effort to scale back its dependance on Samsung for components, as the two companies continue their legal dispute, a new report claims.

DigiTimes on Thursday cited industry sources as saying that Apple has tapped Toshiba and Elpida Memory for orders of DRAM and NAND flash.

"Apple has moved to reduce its reliance on memory supplies from Samsung Electronics, the sources claimed," the report read. "The vendor has procured more NAND flash parts from Toshiba, and mobile RAM from Elpida, the sources indicated."

The tipsters also suggested that the ongoing legal dispute between Apple and Samsung has been "key to encouraging" Apple to broaden its supplier base. According to the report, the Korean electronics giant has been the largest component supplier for Apple's products in the past.

Last week, reports emerged that Apple had signed a foundry agreement with Taiwan Semiconductor Manufacturing Co. to manufacture the next two generations of Apple processors. The deal has been viewed as a significant blow to Samsung, which was contracted to produce the A4 and A5 chips used to power Apple's iOS devices.

Apple is slated to be Samsung's largest customer this year with a projected $7.8 billion in parts, up from $5.7 billion in 2010. The company has become the world's largest consumer of memory chips in recent years as it incorporated flash storage into its products.

In 2005, Apple revealed that it had reached agreements with several flash suppliers, including Samsung, to pre-pay more than $1 billion to guarantee flash shipments through 2010. Earlier this year, then COO Tim Cook called the deal a "fantastic use of Apple's cash."

For its part, Samsung currently boasts a more than 40 percent share of the worldwide DRAM market and a 30 percent share of NAND flash production.

The disagreement between the two companies has heightened in recent months. According to Samsung executives speaking on condition of anonymity, the company is already planning to target the as-yet-unannounced iPhone 5 with patent infringement suits when it arrives in Korea. Another recent report said Samsung will also pursue legal action against Apple's next-generation handset in Europe.

Recent gains made by Apple in Australia have prompted Samsung to fight back with a countersuit against the iPhone and iPad. Apple also won a permanent ban on the Galaxy Tab 10.1 in Germany earlier this month after a court ruled that Samsung's tablet looks too similar to the iPad 2.
post #2 of 35
This is great news for consumers.
post #3 of 35
Quote:
Originally Posted by eksodos View Post

This is great news for consumers.

Especially if Samsung is forced to innovate, rather than imitate.
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post #4 of 35
Samsung is fighting a losing battle and in the long run by losing Apple as its largest consumer, they lose the economies of scale in producing product for their own devices...
Another big loss is the technology transfer gained by producing the next generations of chips like the A5 and A6..... this will be obvious as the next generation of phones, tablets and even TV's come out.... always gonna hurt when you lose the massive buying power of AAPL.
post #5 of 35
I wonder how much effect moves like this will have on South Korea's GDP, billions in sales going to Taiwan and Japan because of Samsung's childish behaviour, at least LG is still getting the LCD business.
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Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.
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post #6 of 35
About time... reminds me of that saying about not biting the hand that feeds you.
post #7 of 35
Quote:
Originally Posted by marokero View Post

About time... reminds me of that saying about not biting the hand that feeds you.

the one that goes "don't place your fingers between the teeth that are about to chew"? i love that one.
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post #8 of 35
I would rather pay more for Apple Products is Apple purchases memory from Japan. Thats if the price goes up because of the japanese memory. Samsung is too much of a competitor for Apple. Besides Samsung has a rep that I think Apple needs to stay away from. Samsung HArd drives are stupidly lame in reliance. Isn't LG a subsidiary of Samsung and didn't Apple discontinue its display screen reliance of LG because of reliability of the product?
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post #9 of 35
Please let this somehow lower the cost of SSDs.
post #10 of 35
I'd like Apple to announce also an investment in Micron and purchase from Micron. That would be another blow to Samsung.
post #11 of 35
Interesting business decision by Samsung: steal IP from your largest customer to hurt sales of the products you sell them parts for. Then sue your largest customer to block all sales of the products that you sell them parts for. Long term result: loss of largest customer.

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post #12 of 35
Looking at Elpida Memory's stock for the past 5 years I see it was well above ¥ 6000 but currently at ¥ 536. If Apple is going to order humongous amounts of memory from them, is it a good time to invest now? Oops, don't answer that; I'm off topic and should't be asking for investment advise on a forum.

Cheers,
PhilBoogie
post #13 of 35
Apple must no longer wish to fund Samsungs clone machine.
post #14 of 35
Board meeting at Samsung this morning. "oh crap."
post #15 of 35
Someone should really bump a bullet to the back of each Samsung executives' head. Samsung executives are so fu*king stupid that they don't deserve to live.
post #16 of 35
Quote:
Originally Posted by elliots11 View Post

Please let this somehow lower the cost of SSDs.

I was wondering this the other day. I realise it is a completely different technology, but hard drives have increased in size/reduced in price per GB on a regular step-by-step basis, but SSDs barely seem to move. 256 GB SSDs have been out for several years now, but after an initial price fall-off, they still remain very expensive. Is there some sort of quiet cartel operating here?
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post #17 of 35
How about some Intel SSDs while at it?

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post #18 of 35
Quote:
Originally Posted by tylerk36 View Post

I would rather pay more for Apple Products is Apple purchases memory from Japan. Thats if the price goes up because of the japanese memory. Samsung is too much of a competitor for Apple. Besides Samsung has a rep that I think Apple needs to stay away from. Samsung HArd drives are stupidly lame in reliance. Isn't LG a subsidiary of Samsung and didn't Apple discontinue its display screen reliance of LG because of reliability of the product?

Most people have no idea - none - whose memory is in their ithing.
post #19 of 35
Quote:
Originally Posted by jd_in_sb View Post

Interesting business decision by Samsung: steal IP from your largest customer to hurt sales of the products you sell them parts for. Then sue your largest customer to block all sales of the products that you sell them parts for. Long term result: loss of largest customer.

Yeah, I don't get it either. Samsung is voluntarily trading a steady inflow of business that is almost guaranteed to bring in wads of stable revenue for years to come, to compete in a highly volatile, saturated market that is racing to the bottom, and where their primary customers have shown over and over again to have very low brand loyalty.

Samsung is really overplaying their hand here. They are betting the farm that they will be able to become the Android equivalent of what Apple is with the iPhone and iPad, even though margins on Android phones are razor thin, competition is fierce, and Samsung itself only has the hardware side of their product covered. I would be hugely surprised if their Android phone/tablet business is making them more money than they are making from the components Apple buys from them.
post #20 of 35
Both samsung and apple have been very successful making great products, and both have a lot of pride and confidence. I can understand samsung's desire to be more than a parts supplier and I respect their ambition.

But they are making a big mistake. In Korea samsung is a very big fish in a small pond. Outside of Korea, samsung is an above average medium sized fish. But Apple is a new breed that appears to be a hybrid between a shark, a killer whale, and an attack submarine. Samsung is toast.
post #21 of 35
Quote:
Originally Posted by allblue View Post

I was wondering this the other day. I realise it is a completely different technology, but hard drives have increased in size/reduced in price per GB on a regular step-by-step basis, but SSDs barely seem to move. 256 GB SSDs have been out for several years now, but after an initial price fall-off, they still remain very expensive. Is there some sort of quiet cartel operating here?

Unlikely. Rather, demand for SSDs and similar chips produced by the same companies has skyrocketed.

If supply increases faster than demand, prices drop. If demand increases in step with supply, then prices generally won't drop much, if at all.

Given the cost of a new chip manufacturing operation, it isn't surprising that supply has not been able to grow faster than demand.
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Gatorguy 5/31/13
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post #22 of 35
It's simple. Samsung has decided to become a competitor instead of a supplier. And that might work out best for them. However, Apple is not going to let Samsung profit from them anymore.
post #23 of 35
Quote:
Originally Posted by Blastdoor View Post

In Korea samsung is a very big fish in a small pond. Outside of Korea, samsung is an above average medium sized fish.

Hm, Samsung Electronics is 22nd biggest World Corpo. That is an above average medium sized fish Outside of Korea? Ok.
post #24 of 35
Quote:
Originally Posted by gescom View Post

Hm, Samsung Electronics is 22nd biggest World Corpo. That is an above average medium sized fish Outside of Korea? Ok.

You are absolutely right. Samsung is a large company by any standard.

However, I wonder if this is going to be a data point which might affect the monster conglomeration trend that has been going on.

Let's take GE, for example. Or Berkshire Hathaway. Massive company with enormous resources - but they own hundreds of smaller companies. The smaller companies are typically operated as independent entities and operate within their own markets using their own resources. A $20 M Berkshire Hathaway company operates as a $20 M company - not as a $20 B company.

For the past couple of decades, these giant conglomerates have grown dramatically and have built on the name. GE companies have clearly benefited from the GE name. Most (if not all) Berkshire Hathaway companies proudly use the name in advertising. But I wonder if the case of Samsung might give them pause. Here you have one division that has cost a different division billions of dollars. Would the Samsung chip-making division be better off today WITHOUT the Samsung ties? Very likely.

I can't guarantee that this situation will cause a re-evaluation of business ownership, but it very well might. Even if that happens, it's also possible that the benefits will be seen to outweigh the disadvantages of separate ownership. At the very least, I will predict some changes over the next couple of decades. Either:

1. A change in ownership structure where large conglomerates spin off unrelated businesses and /or evolve to long term partnerships (like the Japanese keiretsu)
or
2. Continued ownership as conglomerates but with the advertising of the corporate parent taking a back seat to promoting the company itself. Conglomerates may also do a better job of building (and publicizing) the walls between subsidiaries so that any sharing of data between subs is not possible.

I would think that the latter is more likely.
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post #25 of 35
If this increases hardware costs which the consumers (all of us here) have to incur, how is this a good thing? Why would you want Apple's biggest competitor, Samsung, to die? Are you all that brainwashed?
post #26 of 35
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post #27 of 35
On Apple's part, their attitude towards Samsung amounts to biting their nose to spite their face.

I think it is reasonable to presume that Apple originally sourced products from Samsung because they were the 'best' at making those components. Now, unless Apple got it's original homework wrong, they are going to have to settle for second best suppliers for those components. Meanwhile, other manufacturers of devices that might compete with Apple products will have access to a better supplier than those Apple will be using due to the freeing up of capacity that Apple's departure will mean for Samsung.
post #28 of 35
The signs are very bad for Samsung. Their iPad clone is already being banned in Germany, but that's just the first shot in a long war that Samsung can't win.
And things will continue to get worse for them in many other areas thanks to their irrational and self-destructive hostility toward Apple.


The real damage is yet to come. Here are a few facts to ponder:

1. Samsung is planning to cut back 80% of their LCD TV production to spend more on "mobile devices."

This January at CES, Samsung said that "Smart TVs" were the center of their "digital hub."
Evidently that didn't work out for them. Neither did that "3D" TV gimmick.
http://www.appleinsider.com/articles..._on_apple.html

And judging by how poorly Galaxy Tab sales have always been, spending more on "mobile devices" is not a wise move.
http://www.appleinsider.com/articles...ite_small.html


2. Samsung was one of Google's leading Android handset manufacturers. Until the Motorola Mobility acquisition.

Samsung and all other Android hardware partners will be competing in the 2nd-tier ghetto in both the Android and Windows Phone worlds.
They are now forced to hedge their bets by ramping up Windows Phone 7 handset development.
But as we've all seen, WP7 sales have been about as "smooth" as Galaxy Tab sales. (Evidently the terms for "smooth" and "flat" are the same in the Korean language.)

Palm also tried hedging their bets with devices that ran Palm OS and Windows Mobile. Didn't help.


3. Apple is already moving to replace Samsung as an LCD display panel supplier.

Apple has tested high-resolution LCD panels from LG as well as Samsung for iPad 3.
http://www.appleinsider.com/articles..._displays.html

Samsung had quality issues with the current iPad 2 screen and couldn't (or wouldn't) meet Apple's quotas. Apple has apparently invested $1 billion in an LCD factory.
In Japan, owned by Sharp.


4. Samsung is already warning investors that they will be losing processor and LCD panel business as Apple contracts with other suppliers.
Apple will use them to set an example of what *not* to do when you're an Apple supplier.

Earlier this year, Samsung predicted a quadrupling of chip orders from Apple. To more than Samsung used itself in its own products:
http://www.appleinsider.com/articles...e_in_2011.html

Not any more. Now they predict weak demand for chips and displays as Apple starts to cut Samsung out of their supply chain:
http://www.appleinsider.com/articles...f_of_2011.html

It's amazing. Who's board of directors is worse? HP's or Samsung's? It's a toss-up.

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post #29 of 35
Quote:
Originally Posted by cnocbui View Post

On Apple's part, their attitude towards Samsung amounts to biting their nose to spite their face.

I think it is reasonable to presume that Apple originally sourced products from Samsung because they were the 'best' at making those components. [...]

Apple buys commodity products from Samsung. Products that many manufacturers around the world can build with equal quality.

Apple chose Samsung because of their combination of quality and low cost. I'm sure Apple can afford to pay a fraction more for the same quality components. It would be worth it just to keep Samsung out of the loop. They won't be able to leak secret information on upcoming Apple products any more:

http://www.appleinsider.com/articles...edge_fund.html

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post #30 of 35
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post #31 of 35
Quote:
Originally Posted by Aizmov View Post

How about some Intel SSDs while at it?

Amen - and how about buying that Intel / Micron flash (IM Flash) that goes in them - cutting edge process technology, made next to Salt Lake City in the good 'ol USA.

I love Apple, but they obviously don't give a crap about buying from domestic suppliers - in fact it seems they go out of their way to favor Asian suppliers.

When out unemployment rate is ever increasing and the average American spends hundreds on Apple's products - Apple should not bite the hand that feeds it...
post #32 of 35
Quote:
Originally Posted by elliots11 View Post

Please let this somehow lower the cost of SSDs.

This is wishful thinking. It's actually a more expensive country for manufacturing as a whole, but it is home to some excellent engineering.


Quote:
Originally Posted by iCupertinoMDN View Post

Someone should really bump a bullet to the back of each Samsung executives' head. Samsung executives are so fu*king stupid that they don't deserve to live.

You know that's just unnecessary.


Quote:
Originally Posted by cnocbui View Post

On Apple's part, their attitude towards Samsung amounts to biting their nose to spite their face.

I think it is reasonable to presume that Apple originally sourced products from Samsung because they were the 'best' at making those components.

Cost is a big part of this here. Most quality displays on the market use OEM panels. This doesn't make them all the same display as a lot goes into the engineering after this point, but in terms of competitive pricing for such a machine and the ability to keep up with demand they're basically stuck between Samsung and LG. Both have had inherent strengths and weaknesses in the past with Samsung's pva favored more in gaming with LG panels were favored in displays used in areas like prepress/video editing because of generally wider viewing angles/lack of gamma shift. This is a bit generalized and the two technologies have homogenized in quality to a large degree. It's just that if things break down with LG, who will they go to after that? If Samsung is completely off the table, price negotiations could become more difficult there (ips has historically been more expensive to implement at similar sizes). You can fact check me on this if you like. Apple, NEC, Lacie, Eizo, Dell, etc. have all used panels from LG and Samsung in their higher quality displays.

Quote:
Originally Posted by SockRolid View Post



Apple has tested high-resolution LCD panels from LG as well as Samsung for iPad 3.
http://www.appleinsider.com/articles..._displays.html

Samsung had quality issues with the current iPad 2 screen and couldn't (or wouldn't) meet Apple's quotas. Apple has apparently invested $1 billion in an LCD factory.
In Japan, owned by Sharp.

I don't think I've seen any desktop display panels made by Sharp in a long time. I haven't seen Hitachi or Mitsubishi ones either. It seems like outside of medical grade panels everyone just OEMs theirs from LG or Samsung (not counting TN panels). Then again I don't know that much about Sharp in general. They're probably involved in a lot of things where I don't see their name.

Quote:
Originally Posted by 21yr_mac_user View Post

Amen - and how about buying that Intel / Micron flash (IM Flash) that goes in them - cutting edge process technology, made next to Salt Lake City in the good 'ol USA.

I love Apple, but they obviously don't give a crap about buying from domestic suppliers - in fact it seems they go out of their way to favor Asian suppliers.

When out unemployment rate is ever increasing and the average American spends hundreds on Apple's products - Apple should not bite the hand that feeds it...

This is a pretty common argument on the forum. I haven't seen the price/performance on intel's line personally so I can't comment there. On the topic of Micron, haven't they've purchased Micron ram before. I agree with you on Apple caring very little outside of their bottom line but going into detail would derail the thread.
post #33 of 35
it is really incredible how people think apple is the only one client of Samsung.
6% is nothing, 94% of the company is untouched and even complete Samsung division, has nothing to deal with apple.

Samsung will cut the investment in LCD technology for AMOLED and LED panels.

men you should know the technology market is beyond apple... This is really stupid and crazy...
post #34 of 35
Whatever... so Apple is the current king of the hill. Lots of enterprises have come before them and undoubtedly many will rise into prominence after them. I remember reading about the Egyptians, the Roman Empire, the Persians, the Ottomans, the British Empire, General Motors, IBM, AOL, Yahoo, Microsoft, the United States of America, etc, all great at one time and all have failed to retain their number 1 status. I expect no less from Apple. Enjoy it while it lasts. The way they are bullying everyone and forcing consumers and professionals alike to take it or leave it, I don't give them long at the top.

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post #35 of 35
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